RESULTS PRESENTATION 1 ST SEMESTER 2011
HIGHLIGHTS MANAGEMENT ANALYSIS - ECONOMIC AND FINANCIAL ANALYSIS - ANALYSIS BY SEGMENT - CAPEX - NET DEBT KEY MESSAGES APPENDICES
HIGHLIGHTS
HIGHLIGHTS Operating Revenues of 233.6 M EBITDA of 1.6 M and EBIT of -8.7 M Weak operational performance at Metallic Constructions impacted by the restructuring plan under implementation until the end of the year Net reported Profit attributable to shareholders of -15.3 M Sustainable order books: in Metallic Construction 303 M and Solar 276 M 4
MANAGEMENT ANALYSIS
MANAGEMENT ANALYSIS ECONOMIC AND FINANCIAL ANALYSIS 6
ECONOMIC AND FINANCIAL ANALYSIS Reported Figures - non audited 1H2011 1H2010 M - IFRS Marg. Restated Marg. Var. % Revenues 233.6 238.6-2.1% EBITDA 1.6 0.7% 20.5 8.6% -92.2% EBIT -8.7-3.7% -6.8-2.9% -27.5% Financial Results -9.3 9.7 n.m. Profit before tax -18.0 2.9 n.m. Income tax 2.1-1.2 n.m. Consolidated Net Profit -15.9-6.8% 1.7 0.7% n.m. Attributable to non-controlling interests -0.6 1.6 n.m. to shareholders -15.3 0.1 n.m. Revenues decreased 2.1% YoY to 233.6 M EBITDA registered 1.6 M, a decrease YoY of 92.2%, with a 0.7% margin, comparing with 8.6% in 1H10 Net Financial Expense amounted to -9.3 M Net Profit attributable to shareholders amounted to -15.3 M, comparing with 0.1 M in 1H10 7
BREAKDOWN OF REVENUES 1H11 GEOGRAPHIC DISTRIBUTION OF REVENUES FY09 FY10 Iberia 43.5 % Iberia Iberia 5.5% 5.6% 9.9% 38.0% 29.2% 52.9% 47.1% 50.7% 49.3% 5.7% 6.1% Other 56.5 % Angola Australia Belgium Brazil Czech Republic France Greece Ireland Italy Morocco Poland Romania Slovakia UK USA Other Other POSITIVE SIGNS: Continuous reduction of dependency on depressed Iberia Balanced expansion strategy: Mature countries Central and Southern Europe (29%) Emerging markets Angola and Brazil 1 st signed contract 8
REVENUES REVENUES - QoQ Trend 250 200 200.4 168.7 169.6 150 100 145.5 132.7 127.5 99.9 138.8 114.8 118.8 50 0 1T09 2T09 3T09 4T09 1T10 2T10 3T10 4T10 1T11 2T11 Revenues 1H 2011 1H 2010 Restated M Weight M Weight Var. % Martifer Consolidated 233.6 238.6-2.1% Metallic Construction 122.3 52.4% 156.1 65.4% -21.6% Solar 109.9 47.1% 71.5 30.0% 53.7% Others 1.4 0.6% 11.0 4.6% -87.3% Note: Others includes Holding, Adjustments and Eliminations Revenues decreased 2.1% YoY to 233.6 M ; the strong growth in the revenues of Martifer Solar almost compensated the reduction in the Metallic Construction BU Solar segment showed a strong growth of 53.7% YoY, as a consequence of the strategy implemented during 2010, diversifying to several geographies with positive results throughout 2011 The weight of the core business areas is almost at 100% 9
EBITDA EBITDA - QoQ Trend 30 25 20 15 10 5 0-5 27.0 EBITDA Margin 13.5% 13.1 13.7 13.0 11.0 9.4 9% 10.3% 10.2% 11.0% 6.8% 1T09 2T09 3T09 4T09 1T10 2T10 3T10 4T10 1T11 2T11 19.8 11.7% 16.3 9.6% 5.3 4.6% -3.1% -3.7-10 EBITDA 1H 2011 1H 2010 - Restated M Margin M Margin Var. % Martifer Consolidated 1.6 0.7% 20.5 8.6% -92.2% Metallic Construction -3.4-2.8% 8.8 5.7% n.m. Solar 2.8 2.5% 7.5 10.5% -63.4% Others 5.7-3.4-66.8% Note: Others includes Holding and Adjustments Consolidated EBITDA in the 1H11registered a sum of 1.6 M, a decrease of 92.2% YoY EBITDA margin of 0.7% versus 8.6% YoY This weak operational performance is due to (1) the negative margins in metallic constructions due to the poor performance in Eastern Europe and to the impact of the integration of the wind cluster and (2) the lower margins in solar projects as well as the internationalization effort and the associated costs of entry in this business unit 10
MANAGEMENT ANALYSIS ANALYSIS BY SEGMENT 11
METALLIC CONSTRUCTION Sector Trends Specific Markets PORTUGAL The Government has recently asked the European Union for a bailout; the austerity programme includes a reduction on public investment (even some that was already contracted) and the economy could recover in 2013, but most probably will only do so in 2014 or 2015. SPAIN The Minister of Civil Works has announced 10 billion euro bids of new projects this year, double the value awarded last year, which can represent a good opportunity. Still, sector statistics are weak when compared with last year (public bidding down 50% YoY and housing starts down 12% YoY). International Outlook The metallic construction sector worsened in the 2Q11; hence, the competition for the projects available is even tougher, leading to a serious reduction in margins. Most European countries have been struggling to return to growth levels from before the crisis, without significant improvements in the 2Q11. Emerging markets have been driving economic growth and there has been significant demand for metallic structure, mostly in Asia and South America. Steel prices rose during the 1H11, the European Steel price index is up by 14.5% YoY. ANGOLA Still showing strong dynamic, both from the public and the private sectors, this market is becoming increasingly competitive. UK The prospects for 2011 are still not encouraging, but all signs indicate that 2012 will be a positive year with increasing demand, despite the escalation of the crisis in Europe. EASTERN CENTRAL EUROPE The economic growth in these countries is very slow at the moment; the construction market only now seems to show improvement on the demand side BRAZIL The country with higher expected growth for the following years, with significant public investment due to the World Cup in 2014 and the Olympic Games in 2016; it is a certainty for the future. FRANCE In 2011 we have been observing a recovery of the construction market in this country, with the ramp-up of significant public investments but also with an increase of private investment, both in the residential and the non-residential (office buildings) sectors 12
METALLIC CONSTRUCTION Order Book Project Location Total Value Beginning Year End Year Artenius PTA plant Sines, Portugal Euro 25.9 M 2008 2011 Galp Petrogal (conversion of refinery ) Sines, Portugal Euro 30.0 M 2009 2011 Coach Museum Lisbon, Portugal Euro 5.5 M 2010 2011 ORDER BOOK FY2010 TOTAL: 360 M Other - 23% Iberia - 29% Ulla Bridge Corunna, Spain Euro 20.8 M 2009 2011 Repsol Head Quarters Madrid, Spain Euro 20.5 M 2009 2011 Amiens Hospital Amiens, France Euro 7.0 M 2010 2011 Office Building ZAC Victor Hugo Paris, France Euro 3.0 M 2010 2011 CHU D'Orleans Paris, France Euro 9.6 M 2010 2011 Lille Stadium (locksmiths) Lille, France Euro 5.9 M 2011 2012 Carfi Siedlce, Poland PLN 11.7 M 2010 2011 Renault Factory Tangier, Morocco Euro 42.2 M 2009 2011 Canberra Airport Terminal Canberra, Australia AUD 10.6 M 2009 2011 Angola - 10% Central Europe - 27% Eastern Europe - 11% Alstom Mannheim 9 Mannheim, Germany Euro 19.1 M 2010 2011 Morocco Mall Casablanca, Morocco Euro 6.3 M 2010 2011 Office Building in Luanda Luanda, Angola Euro 13.3 M 2010 2011 ORDER BOOK 1H2011 TOTAL: 303 M Financial City Luanda, Angola Euro 13.6 M 2010 2011 Edinburgh International Conference Centre Edinburgh, Scotland GBP 8.3 M 2010 2011 Scotland s National Arena Glasgow, Scotland GBP 12.9 M 2011 2012 Birmingham New Street Birmingham, England GBP 8.2 M 2011 2011 Nissan Battery Plant Cacia, Portugal Euro 5.4 M 2011 2012 BBVA Headquarters Madrid, Spain Euro 12.0 M 2011 2012 King Abdullah Financial District Riad, Saudi Arabia Euro 20.8 M 2011 2012 Deva Bridge Deva, Romania RON 28.1 M 2011 2012 Other - 17% Brazil - 9% Angola - 11% Iberia - 20% Eastern Europe - 16% Vale Verde Shopping São Paulo, Brazil BRL 13.0 M 2011 2012 Note: Variations in some of the projects values between periods may occur due to changes in the total value of contracts Central Europe - 26% 13
METALLIC CONSTRUCTION Earnings Metallic Construction 1H2011 1H2010 Var. % M Restated Revenues 122.3 156.1-22% EBITDA -3.4 8.8 n.m. EBITDA Margin -2.8% 5.7% -8.4 pp EBIT -8.6 2.2 n.m. EBIT Margin -7.0% 1.4% -8.5 pp Net Financial Expenses 5.6 0.4 >100% Income tax 2.1-0.2 n.m. Net Profit -12.1 1.6 n.m. Attributable to non-controlling interests -0.1 2.7 n.m. Attributable to shareholders -12.0-1.1 <-100% Total order book sums 303 M Metallic Construction s Revenues declined by 22% in the 1H11 to 122.3 M EBITDA reached -3.4 M, corresponding to an EBITDA margin of -2.8%, a decrease of justified by the poor performance in Eastern Europe and the impact of the integration of the wind cluster in metallic constructions Net Profit totalled -12.1 M, of which -0.1 M attributable to non-controlling interests in Martifer Angola Total Net Debt reached 116.9 M ; added to this we have 46.6 M of debt at the Holding level 14
SOLAR Sector Trends Specific Markets ITALY The new decree came into force in the beginning of June; it establishes a 23 GW target by 2016 (the previous target was 8 GW by 2020). According to GSE (Gestore Servici Energetici), Italy installed about 5.9 GW in 2010; this year it may reach between 4 and 6 GW, driven by a boom in rooftop installations. PORTUGAL The Government announced the objective of 1,500 MW of solar capacity installed by 2020; in the end of 2010, there was a tender for 150 MW of PV. A new legislation for medium size generation has also been published, assuring a 50 MW/year market until 2020; together with the 25 MW/year of microgeneration, the country now has a stable legislation guaranteeing 75 MW/year of new PV installations until 2020. International Outlook The nuclear crisis in Japan has contributed for the resurging of the debate on the world s future energy mix and security of energy supply. Adding to this, Germany has already decided to drop its nuclear energy plan and in Italy a referendum declined the nuclear energy alternative. With the evolution of PV systems costs, it is more and more an alternative to conventional electricity sources, proving to be part of the energy solution for the present and future. According to a study by Bloomberg New Energy Finance (BNEF), Europe must invest more than 100,000 million euro in solar PV until 2020 in order to reach the targets proposed in the National Renewable Energy Action Plans (more than half to be spent in Germany). SPAIN The new Renewable Energy Plan for the country forecasts 7.25 GW of PV installed by 2020, which leaves a market of around 500 MW per year. FRANCE After a good 2010, the Government has defined a cap/corridor system with annual objectives per market segment, which will likely toughen the competition; it is one of the promising markets for 2011 due to all the permits issued under the previous legislation, probably reaching between 0.9 and 1.4 GW. The market is still adapting to the new system, and shall remain stable in the commercial, industrial and agriculture segments. BELGIUM The changes in the support scheme are significant and there will be a sharp decrease from July 2011 onwards. The market in 2011 should be between 120 and 480 MW; the rooftop segment will continue stable. GREECE After having installed 150 MW in 2010, the market appears to have finally taken off, with 400-600 MW forecasted for 2011 and for the next few years in small and medium installations. The government wants to reach 2.2 GW by 2020. USA Strong market, especially in California (representing 60% of total installations), should reach between 1.5 and 1.8 GW this year. 15
SOLAR Earnings Solar 1H 1H Var. % M 2011 2010 Revenues 109.9 71.5 54% EBITDA 2.8 7.5-64% EBITDA Margin 2.5% 10.5% -8.1 pp EBIT 1.7 6.2-73% EBIT Margin 1.5% 8.7% -7.2 pp Net Financial Expenses 0.0 1.6-99% Income tax -0.4 1.1 n.m. Net Profit 1.3 3.5-62% Attributable to non-controlling interests -0.2 0.8 n.m. Attributable to shareholders 1.6 2.7-43% The Backlog of the turnkey contracts (signed) is 276 M, with Italy, USA and Belgium as the geographies with the most significant contribution Revenues were up by 54% YoY totalling 109.9 M, a consequence of the aggressive growth strategy implemented in 2010,which continues to produce effects throughout 2011 EBITDA decreased 64% YoY to 2.8M with a margin of 2.5% versus 10.5% in the 1H10, impacted by the i) internationalization effort and its associated cost of entry, ii) increased weight of the distribution business with lower margins, iii) traditional lower performance in the first half of the year in Europe Net Profit totalled 1.3 M against 3.5 M in the same period last year, an YoY decrease of 62% CAPEX in the 1H11 was 20.3 M, contrasting with 1.0 M in the same period last year, mostly due to the investment in the licensing of projects in the USA and France Net Debt was at 79.8 M at the end of the 1H11, an increase of 50.1 M from the end of the year, explained by the investments in capex an financial investments 16
OTHERS RE Developer s Earnings & Others RE Developer 1H 1H Var. % M 2011 2010 Revenues 6.5 10.3-37.2% EBITDA 2.0 3.4-42.1% EBITDA Margin 30.5% 33.1% -2.6 pp EBIT -1.0-14.9 93% EBIT Margin - - - Net Financial Expenses -4.0-0.9 <-100% Income tax 0.4 0.1 >100% Net Profit -4.6-15.6 70.4% Attributable to non-controlling interests -0.6-1.6 60.5% Attributable to shareholders -4.0-14.0 71.5% Operating Revenue was 6.5 M in the 1H11, corresponding to 36.1 MW of assets in operation EBITDA reached 2.0 M in the 1H11, representing an EBITDA margin of 30.5%, affected by origination and development costs of projects in Poland, Romania and Brazil; Total CAPEX in the 1H11 reached 24 M, mostly applied to the development of wind projects in Poland (Bukowsko) and in Romania (Babadag) Total Net Debt amounted to 57.6 M at the end of the period, of which 15.7 M from Project Finance; added to this we have 97.3 M in debt from the Holding 17
CAPEX CAPEX QoQ TREND 60 50 40 44.9 50.4 M 30 30.5 25.1 27.6 20 16.9 10 10.0 8.9 9.5 11.1 0 1T09 2T09 3T09 4T09 1T10 2T10 3T10 4T10 1T11 2T11 From the capital expenditures of the 1H11, only the investment in metallic constructions results from a strategic long term decision of entering a new country: Brazil. The other investments in Solar and RE Developer are short term investments necessary to complete renewable projects already under construction that the Group expects to sell until 2013 according to the Group s net debt reduction plan. The amount of investment in fixed assets in the 1H11 (Capex) was 50.4 M, essentially applied to: the construction of RE Developer s wind farms in Poland and Romania (23.8 M ), which the Group expects to dispose of in the medium term; the development of solar projects in the USA and France by Martifer Solar (20.0 M ); and the construction of Metallic Construction s new facility in Brazil and varied maintenance capex (4.5 M ). 18
NET DEBT M Metallic Construction Solar Other Holding Martifer Consolidated Corporate Net Debt allocated to operating activities 88.5 79.8 41.9 147.1 357.2 Corporate Net Debt allocated to non-operating activities 28.4 28.4 Non-Recourse Net Debt 15.7 15.7 Total Net Debt 116.9 79.8 57.6 147.1 401.3 Holding debt allocated to business units 46.6 97.3-143.9 Note: Net Debt = Borrowings + Financial Leases (+/-) Derivatives Cash and Cash Equivalents 19
KEY MESSAGES
KEY MESSAGE What went wrong in 1H11 What we are doing to improve Weak operational performance in Metallic Constructions: - Depressed Iberia - Negative results in Eastern Europe - Impact of the integration of the wind cluster in metallic constructions Internal reorganization in Metallic Constructions / New Step Programme: Carlos Martins reassumed operation control as CEO of the business area Focus in complex works with a strong engineering component and higher margins Balanced expansion: successful entry in Brazil, UK and France Increase in operational efficiency by reducing cash costs Lower margins in Solar: - Growing competition and reduction of government support - Internationalization entry costs Solar operational performance continues to outperform peers: strong contribution coming from France, Belgium and USA Growth of Net Debt due to specific investments in Solar and RE Developer projects Maintenance of net debt targets for 2013 with the sale of non-core assets and working capital optimization Maintenance of healthy financial autonomy (equity/assets) 21
NET DEBT FORECAST FY 2011 - FY 2013 STRATEGY Maintenance of net debt targets for 2013 (230-250 M ) comfortably achievable with the sale of non-core assets 400 M Non-Core Assets* 274 M Value to achieve target 150-170 M ~60% needed 230-250 M FY'11 Net Debt Forecast FY'13 Net Debt Forecast * Includes RE Developer s Solid Assets [236 M ] 22
APPENDICES
P&L M 1H11 Reported 1H10 Restated Var. 1H10 Reported Revenues 233.6 238.6-2.1% 245.0 Gross Profit 71.5 94.8-24.6% 98.2 Earnings before depreciation, amortization and provisions & impairment losses (EBITDA) 1.6 20.5-92.2% 22.2 EBITDA margin 0.7% 8.6% -7.9 pp 9.1% Depreciation & Amortization -9.7-12.5 22.7% -13.1 Provisions & Impairment Losses -0.6-14.7 96.0% -14.8 Operating Income (EBIT) -8.7-6.8-27.5% -5.7 EBIT margin -3.7% -2.9% -0.9 pp -2.3% Financial Results -9.3 9.7 n.m. 7.9 Profit before taxes -18.0 2.9 n.m. 2.2 Income tax 2.1-1.2 n.m. -1.2 Net Profit -15.9 1.7 n.m. 1.7 Attributable to non-controlling interests -0.6 1.6 n.m. 1.6 Attributable to shareholders -15.3 0.1 n.m. 0.1 per share -0.153 0.001 0.001 24
BALANCE SHEET M Jun-11 Dec-2010 Restated Var. Dec-10 Var. Fixed Assets (including Goodwill) 433.2 375.3 15.4% 416.8 3.9% Other non-current assets 165.9 138.4 19.9% 116.6 42.3% Other non-current financial assets 20.6 20.2 1.8% 20.2 1.6% Inventory and Receivables 424.6 484.3-12.3% 495.8-14.4% Cash and cash equivalents 38.6 74.5-48.3% 76.7-49.7% Total Assets 1,082.8 1,092.7-0.9% 1,126.1-3.8% Shareholders Equity 297.1 307.1-3.3% 309.3-3.9% Non-controlling interests 34.9 31.0 12.5% 31.0 12.5% Non-controlling interests associated to assets held for sale - 0.0-0.0 - Total Equity 332.0 338.1-1.8% 340.2-2.4% Non-current debt and leasings 167.8 179.2-6.3% 198.8-15.6% Other non-current liabilities 38.3 34.1 12.2% 38.4-0.4% Current debt and leasings 271.8 216.4 25.6% 221.2 22.9% Other current liabilities 272.9 324.9-16.0% 327.3-16.6% Total Liabilities 750.8 754.6-0.5% 785.8-4.4% 25